Pick The High-Hanging Fruit
Some subscribers can't get enough about the inner workings of our Quadrix system — such as how it uses nearly 100 statistics in six categories to compute percentile rankings for roughly 5,000 stocks. Those who wish to learn more should visit
www.DowTheory.com/Go/Quadrix. For the rest of you, we'll sum up our findings in three key points:
• Quadrix works. Stocks with high Quadrix Overall scores tend to outperform the average stock.
• Higher is better. Our research suggests that while stocks scoring above 80 Overall deliver market-beating returns, those scoring above 90 return even more, while stocks earning scores above 95 or 97 are stronger still.
• Quadrix is versatile. Our Overall score aggregates statistics from six categories — Momentum (recent operating results), Value (price/earnings and other valuation ratios), Quality (long-term growth and returns on assets, investment, and equity), Financial Strength (debt levels, interest coverage, and profit margins), Earnings Estimates (analysts' revision trends), and Performance (stock returns).
However, investors can tilt their analysis to favor a particular type of stock by focusing on companies with high scores in both Overall and their preferred category. See Quadrix Spotlight for more on this strategy.
We've long limited our new Buys to stocks scoring above 80 Overall, but we prefer those with much higher ranks. Twelve of the 15 stocks on our Focus List, or 80%, earn Overall scores of at least 90, with seven topping 95.